Pernod Ricard’s full-year earnings get boost from China’s New Year
By Thomas Buckley - Apr 19th 2018, 15:34
Growth in profit from recurring operations will be about 6%; the Chivas Regal maker’s shares rose as much as 1.8% in early trading in Paris.
China’s New Year celebrations drove a surge in demand for Pernod Ricard’s spirits, helping the world’s second-largest distiller boost its full-year earnings forecast and pledge bigger rewards for shareholders by overhauling its dividend policy.
Growth in profit from recurring operations will be about 6%, the top end of a previous target of between 4% and 6%, Paris-based Pernod Ricard said in a statement.. Its shares rose as much as 1.8% in early trading in Paris.
The maker of Chivas Regal whisky also plans to pay a bigger share of its earnings in the form of dividends to shareholders, reflecting the company’s accelerating profit growth and reduced debt load. Pernod Ricard will decide on a payout between 37% and 50% of profit at the AGM in November, CEO Alexandre Ricard said by phone, as part of a new programme that will see annual payouts progressively lifted to about 50% of earnings over the next three years from a previous rate of about one third.
"The rationale behind this is an acceleration of our performance and significant de-leveraging over the past two to three years, and that our payouts have tended to be below our peers," Ricard said.
China’s lunar New Year festivities in February fell later than usual this year, making for favourable annual comparisons. Pernod Ricard joins Rémy Martin owner Rémy Cointreau and Hennessy maker LVMH in reporting strong sales of cognac in the country, where demand for its Martell brand lifted the group’s revenue by 9.3% on an organic basis in the three months until the end of March. Analysts expected 6.5% growth
Pernod Ricard’s sales in the Americas rose 6%, helped by Jameson Irish Whiskey in the US. The company is seeking to further expand in that market by targeting acquisitions of American whiskeys, Pernod Ricard has said.
The spirits maker sees a full-year negative currency impact of about €200m on profit, Ricard said.©2018 Bloomberg
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